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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Spekulatius who wrote (36708)	2/19/2010 9:46:34 AM
From: E_K_S	Read Replies (1) \| Respond to of 78777

Hi Spekulatius - Thanks for the overview on Sempra Energy (SRE). I have owned this stock for years when it was part of the San Diego Gas & Electric company. The stock is off over 14% from its January highs. Behind JPMorgan’s Deal With RBS Sempra February 16, 2010, 8:00 pm dealbook.blogs.nytimes.com From the article:"...Sempra Energy is a power company that uses its trading arm to hedge the huge risks involved with selling power to utilities. JPMorgan offered to give Sempra a small portion of the North American gas and power trading business, but Sempra refused to go along, according to a person familiar with the negotiations...." Like you pointed out Sempra receives a capital infusion from the sale but will lose the profits from their trading business. Actually, I like the idea that the company looks like it will exit the energy trading business so it can better focus on its core businesses. The company could decide to deploy their refunded capital on a new electric generation property or plant expansion. Energy demand for Southern CA continues to grow. I think at some point in the past, Sempra was exploring expanding into Arizona and or Mexico to build a NG power plant that would service their long term electric power demands for the company. Maybe this is the start for this transition. If so, the company could become a "value" buy on further weakness and the forward profit uncertainty w/o their energy trading business. EKS